Preferential Trade Liberalization and the Path-Dependent Expansion of Exports
Series
University of St.Gallen Discussion Paper
Type
discussion paper
Date Issued
2007-03-31
Author(s)
Borchert, Ingo
Abstract (De)
In the presence of sunk costs to exporting, preferential tariff liberalization may have a prolonged, dynamic effect on the pattern of a beneficiary country's exports. In particular, preferential tariff liberalization might trigger a geographic spread of exports to third markets outside the preferential trading area. I test this hypothesis for the pattern of Mexican exports after the inception of NAFTA to several Latin American trading partners. After controlling for product specific shocks and the overall trend in export growth, the evidence
is consistent with the hypothesis that initial exports to the United States further prompted exports to third markets. The results suggest a significant impact on exports to large or geographically proximate countries (Argentina, Brazil, Peru, Costa Rica, Guatemala,
Honduras and Panama). The stunning growth in the extensive margin as a count measure owes much to rather simple goods, while more sophisticated goods exert a substantial impact on the value of Mexican exports. The findings also document the existence of considerable tariff-induced trade diversion for goods with little skill or technology content.
is consistent with the hypothesis that initial exports to the United States further prompted exports to third markets. The results suggest a significant impact on exports to large or geographically proximate countries (Argentina, Brazil, Peru, Costa Rica, Guatemala,
Honduras and Panama). The stunning growth in the extensive margin as a count measure owes much to rather simple goods, while more sophisticated goods exert a substantial impact on the value of Mexican exports. The findings also document the existence of considerable tariff-induced trade diversion for goods with little skill or technology content.
Language
German
Keywords
Preferential tariffs
Mexico
NAFTA
sunk costs
conditional logit panel estimation
HSG Classification
not classified
Refereed
No
Number
No. 2007-06
Start page
39
Subject(s)
Division(s)
Eprints ID
39316